What's today's cutting edge of retail banking? It's a customer experience obsession. It's customer service that goes wayyy beyond asking you to "have a nice day." Community involvement that's more than a slogan. Employee empowerment, a la the Ritz-Carlton. Design, sizing, and build-out a la Starbucks. And technological assistance à la the Apple Store.
But let me back up.
The odds are good that you’ve been to your bank branch within at least the last six months, according to statistics I shared last week from Wells Fargo.
Retail banking customers, in other words, continue to be attached to their bank branches. This is in spite of the popularity of the many self service options thank banks offer. (Another Wells statistic: 80 percent of banking interactions are self-service, including everything from ATM’s to automated checking of balances on the phone to spiffy new stuff like mobile checkscan).
The reason appears to be an anchoring effect, a desire for the warmth and reassurance of a recognizable human being at a known location when a customer’s considering something along the lines of investment advice or a home mortgage, or even (ironically) an explanation for how to get started with online banking.
A bank so warm and fuzzy it seems knitted out of yarn.
Which brings me to a successful pioneer in this area, Umpqua Bank, a bank so warm and fuzzy that it should probably be knitted out of yarn.
The name (UM-kwa) doesn’t obviously roll off the tongue, and it’s not quite a household name outside of its service area. Yet within its service area (Pacific Northwest and California, mostly) it’s renowned as being,if not the living embodiment of its slogan, “World’s Greatest Bank," at least a bank that tries really, really hard.
Umpqua Bank: Where big banks go to knock off an idea
And if imitation is any measure of success, Umpqua's doing pretty well. It's the clear go-to bank for the big banks to knock off when they're looking for an approach that will keep banking relevant. For example the Neighborhood Store concept and even name, introduced by Umpqua the better part of a decade ago, has now been taken up as their own by some of the biggest banks in the U.S., of course without attribution.
And worldwide, Umpqua is known and emulated as well: When I was speaking to bankers in Russia this winter, they were all already acquainted with the Umpqua story, ethos, and look.
Branches straight out of Portlandia (in a good way)
An Umpqua bank branch is pretty much Portlandia incarnate: you get the feeling that if you wanted to know if the $20 bill they're handing you was humanely raised they'd send someone off to the currency farm to research the answer for you.
And this is friendliness is on purpose: Led by its charismatic President and CEO, Ray Davis, Umpqua has made customer service and community service its central differentiator for several decades, as it has grown from four branches in 1995 to 400 branches today. [Its roots go back to 1953, but 1995 is the start of its modern day era and growth trajectory.]
An obsession with customer service and community service
And as the banks have changed over time, the most consistently distinctive thing about Umpqua has been the extremism with which it puts customer service and community service in the forefront.
Not just good customer service. Great customer service. For example, the time when one of Umpqua’s commercial customers’ payroll vendor made a mistake that was going to delay paychecks for their 200 employees. Umpqua associates from divisions around that region came together to get those checks prepared - and hand delivered - so every one of their people got paid.
Or the times—and this almost brings a tear to my eye—when they’ll bring paperwork to the homes of a shut-in customer rather than requiring the customer to labor her way down to the office. Now that is the ultimate in handicap accessibility, and extraordinary customer service.
And the focus on individual customer service is if anything outdone by energy they pour into the community side of community banking. Their stores (as they call their branches) are intentionally designed as community spaces. They host events (last year, more than 6,000 events in their 200 locations) from movie nights to yoga classes to small business events to art exhibits and chocolate tastings. And their Local Spotlight program features small businesses in the community – it rotates quarterly – and even sell their products for them free of charge (businesses can apply to participate – many stores are booked through 2015).
Formality and intimidation are out
Umpqua has been energetic in rethinking the bank branch, and in continually reinventing it over the years. As Umpqua SVP Eve Callahan told me, they first started thinking about the function and purpose of the branch back in the mid-90s, when the rise of ATMs suggested to Umpqua that the branch would need to evolve in order to remain relevant.
"We asked some pivotal questions," says Callahan. "Finances are challenging enough – why are bank branches formal and intimidating? Why does banking have to be a chore? Why can’t banking be an enjoyable experience?”
Umpqua’s branch concept emerged from these questions. They set out to create a different model – what they call bank stores. Callahan: “We made comfortable, attractive spaces that invite people to come in, browse, attend or host an event, enjoy a cup of coffee…..and while you’re there, perhaps you’ll do a little banking”: there’s a chance for the banker to build a meaningful relationship, get to know a person’s financial situation and goals and help them determine the right mix of products in a way that wouldn’t be possible in a more tense, less engaging setting.
A Starbucks build-out model
In 2007 Umpqua created a new version of their “store” that they call the neighborhood store– spaces designed for a smaller footprint (1200-1500 square feet on average) that they could build and open quickly – after studying how retailers like Starbucks are able to build and open neighborhood cafes so quickly. A neighborhood store can be opened in something like 45 days, as opposed to the six months a traditional branch can take. And the feel is very untraditional--more like, well, a Starbucks.
Umpqua’s stores are like Starbucks in another way: As Starbucks transformed coffee from maintenance drug to social and aesthetic experience, Umpqua’s uniquely designed, staffed, wifi’d branches (sorry, “stores”) turn a formerly dull errand, banking, into something someone actual does on purpose.
A culture of employee empowerment–with a nod to the Ritz-Carlton
This is true in all iterations of the Umpqua store, says President and CEO Ray Davis, because “while the design of our stores is important, it’s what happens inside them that really matters, and that’s the result of our culture. Our culture brings our stores to life and differentiates Umpqua’s customer experience. We empower our people to create an extraordinary experience for customers without having to ask permission. And in our stores, that means our people are empowered to program their store with events and activities that will resonate in their community. It’s not dictated from above.”
(If it sounds like Umpqua and Ritz-Carlton are using similar language here, it’s not a coincidence. Davis in fact has been open about actively emulating the famous Ritz-Carlton culture of empowerment.)
From Starbucks to Apple Store
The latest evolution of Umpqua’s “stores” is in a sense more Apple Store than Starbucks, because of the way they use technology to solve a problem of branch banking: that customers come in for a discussion with a knowledgeable human being, but keeping human knowledge up to the minute in the rapidly changing world of bank products and regulations can be close to impossible.
So, as with the Genius Bar at Apple, a customer at an Umpqua branch is assisted by empathetic, knowledgeable people who leverage internal tools and information sources to ensure they can get the customer where they want to go, by using not only their accumulated knowledge but an internal wiki type system that allows associates to be up to the minute on all the latest iterations of banking products. And, via what they call “mobile concierges” (associates armed with iPads and headsets who can help customers on location anywhere in the store), there’s never that “let me go look that up for you” delay that is so traditional.
The key change is from transactional to advisory
But the big change isn’t something you can pinpoint in design. It’s something that’s been clear to Umpqua since the emergence of ATMs on the scene: the change in the role of the branch from transactional to advisory, now that the transactional part of banking is something that doesn’t require human intervention.
“As technology allows people to bank with their fingers, the traditional bank branch must move from transactional to advisory, and give people a reason to want to come in. This is the approach we take at Umpqua with our bank stores,” says Umpqua president Ray Davis.
But is this enough?
Well, probably. Umpqua is a community bank. It takes your money and it lends it out. And the spread is how it makes its money. This hasn't changed since 1995 and the success of the simple model hasn't flagged. It had no issues during the sub-prime catastrophe because it didn't get, uh, creative in the ways of larger banks.
And the more time customers spend in the branches, with the bankers in an “advisory role,” the more likely customers are to sign up for additional banking products (rolling over their IRA’s and 401K’s for example). Which doesn’t hurt the bottom line a bit.
Micah Solomon is a customer experience consultant and keynote speaker on the customer experience, corporate culture, and customer service.
